URB raps N.S. Power

SPORTS FANS know referees are blind. Electricity consumers are equally sure regulators, like the Nova Scotia Utility and Review Board, are pushovers when they approve rate increases no one wants.

But the URB was neither blind nor a pushover in its decision to approve a negotiated deal between Nova Scotia Power Inc. and customer groups that will increase rates by three per cent in 2013 and another three per cent in 2014.

The URB accepted the deal as a way of avoiding steeper increases — by deferring $103 million in recoveries until an earlier expense deferral is paid off, by forcing NSPI to reduce non-fuel costs by $27.5 million and by trimming the allowed rate of return to nine per cent.

But the board also rightly raked the utility over the coals for what can only be called a bad attitude and an over-developed sense of entitlement on executive compensation.

More important to customers, the coal-raking was accompanied by hefty financial penalties for the company and its shareholders.

The board disallowed $2 million in payments to a special executive pension, saying it was “unreasonable” for NSPI brass to contribute nothing to their second-helping pension. The public will make that unanimous.

The URB also agreed with Liberty Consulting’s findings in a fuel audit that NSPI should repay $4.5 million to customers because it was imprudent in rejecting a long-term gas contract without adequate analysis and in burning low-quality coal that reduced power output.

But the board’s harshest criticism came with a $2-million sanction for NSPI’s “inexcusable” response to the audit.

The URB was not amused that the utility refused to follow an agreed process to discuss differences with Liberty at the draft stage of the audit, choosing instead to hire consultants and produce a mountain of paper defending its decisions, berating Liberty and calling on the board to redesign the process. When last-minute testimony showed the utility had accepted and acted on audit findings it was ridiculing in evidence, the board basically fined NSPI for wasting everyone’s time and money.

It was a message NSPI needed to hear. It should focus on its own efficiency, not tell the auditor and regulator how to do their jobs.